Why the Dow's Flying High This Morning

The markets again snubbed Standard & Poor's and its rating downgrades of France and several other European nations, choosing instead to focus on better-than-expected economic data in China that could stimulate global economic growth. In addition, a drop in inflation in Europe could allow the European Central Bank to cut rates. Just after 10 a.m. EST, the Dow Jones Industrials (INDEX: ^DJI) were up 111 points to 12,533, while the S&P 500 (INDEX: ^GSPC) jumped 10 points to 1,299. The S&P index traded as high as 1,303 near the open, the first time it had surpassed the 1,300 level since August.

Among Dow stocks, JPMorgan Chase was the only loser, down more than 1%. Rival Citigroup (NYSE: C) announced that its fourth-quarter profit fell 11% from the previous year, with weakness coming particularly from its investment banking division. Although conditions in its core banking business improved, Citigroup saw its stock drop sharply at the open before rebounding somewhat. With a similar mix of traditional consumer banking and investment-related operations, JPMorgan Chase fell in sympathy.

On the plus side, both United Technologies (NYSE: UTX) and Caterpillar (NYSE: CAT) posted strong gains of around 2%. Caterpillar can attribute its big gain to Chinese economic strength, as the company already has extensive exposure to the emerging nation and sees it as a primary area for future growth. Similarly, if an improving economy filters through to the U.S., United Technologies stands to benefit from more robust demand for its industrial products, particularly in the sensitive defense sector.

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